Guest Post by Anthony B. Sanders
As you know, the S&P Case-Shiller home price indices for October were released this morning. I no longer watch Fox Business or CNBC, so I don’t know what whitewash Bob Shiller, Ed Pinto or Mark Zandi or The Fed were slinging, but let me show you a few charts of home prices and median family income for the west coast versus the east coast.
First, my old home Phoenix (one of the ground zeros for the housing bubble). Like in the film The Big Short, do you see anything that might bother you?
How about San Francisco, where I used to live? See anything troubling? (Hint: Facebook’s Mark Zuckerberg does NOT represent the median family).
Or Los Angeles?
Or Denver Colorado?
These western cities are experiencing rising home prices coupled with declining median family incomes.
Now, let’s switch back to the East Coast and look at Washington DC. Both home prices AND median family incomes are rising.
It is human psychology to not want to recognize a bad situation (or tail risk). But it is there in plain view.
Perhaps if I were more like Dancing Rick from the film “Starsky and Hutch” and presented joy-joy housing and mortgage news, they would invite me back to speak.
California has been lost; now we need to build a wall and only allow English speakers to go East who have needed work skills.
Holy sheet! Look at those “median” family incomes. They can’t be right–LA at $238,000? I mean really, I know there are a lot of folks making tremendous inocmes out there but the “median” family income is $238,000? Something does not add up. I would conjecture the average income is more like $75,000 which is still way above the average income in the U.S. of say $50,000. I agree with his premise and conclusion, but the data isn’t supported by facts.
Self correction, my bad, in L. A. its only $160,000. But look at D. C.- median family income is $211,000 This still cannot be right.
Exactly Jim/ If those stats are right people could buy 2 or 3 houses at those incomes. Which would make homes cheap at those prices.
@Jim use the outer scale for income LA median 60,600 DC 107,000 (DC median your tax dollars at work)
I have a nice 5 bedroom, 4 bath, 3 car garage with a deck and one of the warmest Jacuzzi’s you’ll ever sit in. I was told I need to disclose my jacuzzi sits next to the largest man made methane leak ever reported. Appt., only. Great views
I live near SF. The median home price is about 900k. There is no tail risk due to falling incomes because house prices from Marin to SF thru Silicon Valley are not driven by income. Haven’t been for decades. They are driven by rising wealth and by the movement of capital. The first thing that a sudden Silicon Valley multi-millionaire does is pay cash for a house. Even then, since 2011 in SF 70% of houses bought are by Chinese trying to get their money out of China and to safety. An open house swarmed by buyers from China is a sight to behold. And that’s with capital controls that are supposed to limit transfers out of the country to $50k per person per year. As capital controls come off the flow of funds will turn into a tsunami. That’s who high tech millionaires must compete with. This is happening all along the west coast, which is also the Pacific Rim’s east coast. Bottom line: if you need a mortgage, you can’t afford to buy.
Massive global debt deflation would be needed to reverse skyrocketing prices, and even then, during the last bust, SF prices fell last and least and recovered the fastest and the mostest. The higher the price the less it falls in the Bay Area.
The prophetic words of a developer 15 years ago still ring in my ears. A group of residents voiced astonishment at how obscenely expensive housing had become. “Housing is cheap” he replied. “compared to what it’s going to be.”
I wonder what the price of housing was after the fall of the Roman Empire in 476AD. To use a common cliché, there is a paradigm shift coming when people will realize that housing is not a good store of value but important as a basic shelter. When this happens…and we are near…there will be such a stampede out of the housing market that the wildebeest herds charging across the plains of Africa will seem mild by comparison. Of course, it will bring down the entire financial system, which is good thing because it is parasitic, run by crooks and needs to be purged and rebuilt, and reduce real estate agents to what they really are – overpaid retail workers. As they say, “Those who cannot remember the past are condemned to repeat it.” Santayana in The Life of Reason, 1905).
You fucking dumbasses can’t even read a fucking chart. The median income is on the far right. It is $60,600 in LA you douchenozzles.
Jim gets a bunch of thumbs up from the rest of the fucking idiots who can’t read a fucking chart.
I really need an IQ test for commenters. That would eliminate Jim, Mark, Sensetti, Bea and dozens of other financially illiterate jackoffs.
Jay Morse lays it on thick. Too bad it’s complete bullshit. SF prices fell by 44%, more than the total country.
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haha admin i was about to point that out. what a couple of morans
Thank god those altruistic government workers and lobbyists in DC who are working tirelessly and efficiently to improve and plan every aspect of our lives are prospering. We should all be happy that all of our sacrifices have been able to maintain those d…bags’ lifestyles.
Jim writes:
“Jim gets a bunch of thumbs up from the rest of the fucking idiots who can’t read a fucking chart.”
LOL.
Charts are boring Jim. They aren’t as sexy as pictures and videos and require thought. No instant gratification/stimulation. You actually have to think when you look at them. Who the fuck wants to do that??? Just give me the information and I’ll listen so long as it is presented in a video by a 28 year old blonde or brunette with DD cups spilling out of her spandex dress and push up bra and a nice set of hips to support it all. A sexy pair of high heels and a short skirt helps. Now she can be believed and I have all the information I need.
What were we talking about again???????
This is the way to get your information across… if we could get TBP some more cash flow you could have ladies like these presenting your charts for you… viewer numbers would sky rocket…. is there a chart for that?
Apparently yes…
Jim’s viewership chart after hiring hot chart chick:
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Too much? I think not!
Does “administer” live in San Francico? Anywhere close by? I live 15 minutes from the Golden Gate Bridge. Before here I lived in “the City,” which I’m a 5th gen native of. I lived through the real estate rot in the Bay Area. It started on the outskirts in 2008, reached the inner ‘burbs in early 2009, where I live, then finally reached SF itself in late 2009. The price drops at market bottom were as high as 50% on the outskirts, 35% where I am and 10% in the northern half of SF. I remember the local TV news marveling that even at the bottom of the market studio apartments on Post Street were $400k and up. That was what a real estate agent I was dating in SF in 2010 described as a dead market. That year, rents skyrocketed as much as 60% in some areas, marking the start of an economic boom that continues to this day. A woman I met at a party remarked how lucky she and her husband were to have rented early in the boom (SF has rent control). House and condo prices soon followed. Then buyers from China showed up. A friend of mine helped a billionaire friend from college in China buy a 75 unit apartment building all cash because it had a vacant unit she could stay in when she visits here. That was five years ago when the party was just getting started.
This has happened before on a smaller scale. In the 90s people from Hong Kong were going door to door with suitcases of C notes asking the owners to sell. They were mostly “middle class people with a million dollars to invest” as an observer put it, who were fleeing the handover of HK to China in 1997. When I told a friend from Shanghai in 2012 that we’d seen such a cash driven boom before so we’re used to it, she replied “that’s different. Hong Kong is a small town. China has 200 times more people.”
SF still looks cheap to people in China’s coastal cities. Have you been there? The cities are high tech and all new. The wealth is palpable. Chinese wonder why SF is so old and run down.
I wish the graph’s depiction of a 44% drop in SF was correct because I might have been able to move back across the Bridge and live in my home town again. I missed the boat.